The Bush Boom Was A Complete Bust

The underlying facts of the latest expansion are incredibly simple. Let's use some charts and graphs to explain the basic problems.

First, we have this graph from Spencer England's Economic Review. It clearly shows that establishment job growth during this expansion was the worst of any expansion since 1958.

As the result of lack of job growth, upward wage pressure is non-existent. As a result, real median household income (that's inflation adjusted) was at a level which according to the Census Bureau is, "not statistically different from a 1999 pre-recession peak." That means we went through an entire expansion without a pay raise for most Americans.

As a result, we get the latest information from the worker confidence surveys:

The survey found one-third of workers said they often don't have enough money to make ends meet.

Story continues below

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About one-third of respondents say the amount they owe on credit cards exceeds their retirement savings; another 3% say their credit-card debt would cancel out their retirement account, according to the random survey of 1,000 people, 587 of whom are in the labor force.

Only half of respondents said they are working the number of hours they want to work and a third say there has been a change in the number of hours they work in the past three months. Eighteen percent were working more hours, and 14% worked fewer.

Repeat after me:

1.) The weakest job growth of the last 50 years, leads to

2.) Stagnant incomes for most Americans which leads to

3.) Really depressed people.

Any questions?

Comments

[dadw5boys]

Is there anything Bush has ever touched that has been successful ??????

[johnie2xs]

When Bush gives us his "crocodile tears" regarding the pain of the average American, and the effects on the economy, and their collective pocketbook, I can't help but feel nauseous. Additionally we have a Congress, that unless they get their act together quickly, may be set to allow tax credits for wind and solar investment to lapse. Credits that could pump some much needed stimulus to industries that most economists look to, to potentially be at least a partial solution to our manufacturing, and therefore, our greater economic woes. Now since we're in such a precarious position you would think the last thing we need is more military adventurism. Think again. The Dutch are suspending operations inside Iran, aimed at disrupting Iranian weapons industry, due to plans that the U.S. has to attack selected missile part production and launch sites. How come the MSM doesn't cover this? We can't afford this to happen.

http://www.jpost.com/servlet/Satellite?cid=1220186494776&pagename=JPost%2FJPArticle%2FShowFull

Our economic fragility should be the key to ALL our decisions, domestically and internationally.

DO WE NEED ANOTHER WAR??? Bush should be in shackles just for thinking it.

[Aaror]

Mr. Stewart,
I know you are not a fan of deficit spending, and this post shows you are not wedded to the Republican Party. I have a request of you.
Could you look at the tax proposals of Obama and McCain and compare them to the current deficit? I keep reading Republicans writing about how great McCain's tax cuts are going to be for helping the economy, but I keep wondering what they do to the deficit. I would especially like it if you also addressed how much the deficit is as a percentage of discretionary spending.
I hear a lot of Republicans saying McCain will pay for his tax cuts by cutting pork. I don't think they see the magnatude of the hole we are in. When you ask a Republican whether they want to cut the entire military, or all other discretionary spending (Dept of homeland Security, Dept of Interior, Dept of Education, Dept of Justice, etc.) because just to handle last year's deficit would take one or the other, they tend to go into shock. I think that is a needed shock, but I don't have the skills to do the research, I think you do.
As I see it, either we have to pay for our spending, or repudiate our national debt.

[olephart]

Yours is a very thoughtful addition to this thread. Bonddad has addressed many of your concerns in his previous posts. Simply click on his name at the top and you will find all that you ask. His article on August 25 covers your questions on the candidates' tax policies. He has reviewed and commented on Republican "Supply Side" economics on several occasions.

My own research of economic data has revealed that Reagan's tax cuts never generated enough growth to even cover the resulting deficits they generated. These published data being inflation adjusted based on constant 2000 dollars. If one compares the growth generated during Clinton's 8 years after increasing taxes on the wealthy and bringing the budget into a surplus with Bush's 8 years of marginal growth while lowering taxes on the wealthy and business and generating 4 trillion dollars in debt the answer is obvious. As with most things it is a matter of perspective. If you are sitting at the Captain's table enjoying fine wine and gourmet cuisine it's one thing. If however you are rowing and being fed stale bread and water, it's another.

[DuganS1]

Their are a ton of other economic factors that much be calculated in determining the success fo a certain policy. Clinton was able to achieve strong economic growth despite increasing taxes because several factors were working to his advantage. Those factors include the proliferation of the personal computer, the invention of Windows 95, the proliferation of the cell phone, the invention of the internet, the proliferation of business computer networks, low interest rates, massive Y2K spending, massive commercial real estate investment,a plunging of commodity prices, reduction in military spending. etc. If all these factors happened during the Bush Presidency, there would also have been success. Conversely, if Clinton became President earlier this decade and increased taxes, the economy would have been much worse off. Too many people ignore a huge number of extremely important factors in determining the strength or weakness of the economy and tax receipts.

[styleturn]

The CEO of CountryWide getting $135 million the same year the bank lost $750 million was a good thing.

One of the problems with a lot of economic thinking is that it suggests that all inflation is bad. Of course this is not true.

If a single person receives more money that contributes virtually nothing to inflation. If a lot of people get an increase in their wages then they could purchase more and if a large enough group get increases then the relative value of goods diminish. At some point the serious losers are the banks which loaned money that inflation made worth less in relative terms.

Current policies are aimed not at reducing the inflation of the cost of things, since most of these prices are now mostly set outside of this country. Rather the goal is to maintain the relative value of the money loaned by banks by maintaining tight controls on the average earner's wages.

Now the US, like Japan, China or Russia, could control their markets more directly for the benefit of US production but in that situation we would have the unfortunate side-effect of improving our economy, increasing the amount of wages people receive and thus reducing the long term relative profits of the loans that the banks made in the past.

In order to protect banking profits by controlling the money supply we have the Fed. Deflation or stagflation is the economic future, the banks won't have it any other way.

[olephart]

First, mentioning Bush and Boom in the same sentence should only be done when talking about things that explode; like Iraq or the deficit. The statistics you cite, though from reputable sources, are based on data obtained from a questionable source, the U.S. Government. As has been mentioned in responses to your previous articles and on occasion referenced by you, these data are cooked, sautéed, par boiled and deep fried. Also, the effects of the gains made solely by the upper 5% are included. These gains did not trickle down to working Americans as opposed to the yellow, malodorous liquid that did.

Using more realistic inflation values and looking at the bottom 95% of the workforce you get a much bleaker picture. Real median household incomes have fallen about 10% over the past 8 years. The job creation story is also worse than depicted when one considers that about half of the jobs created over the past 8 years have been Government jobs.

Did I mention that to achieve these results Bush had to borrow and spend 4 trillion dollars? Did I mention that for this 4 trillion dollars Bush has not created any notable additions to the infrastructure, no bridges, roads or hospitals. In fact Bush has allowed things to deteriorate (Minneapolis, New Orleans).

The financial infrastructure has also deteriorated. As you have cataloged, our financial institutions have lost a half trillion dollars and are looking at losing another 2 trillion dollars.

The correct description is Bush Crash.

[DuganS1]

The budget deficits in 2005, 2006, and 2007 were small and below the average of the past 40 years. 9/11 and the economic stimulus were responsible for the deficits of 2003, 2004, and 2008. but we should have seen surplus in 2006 and 2007 to compensate for that. Most infrastructure is funded by local and state governments and by private enterprise, not the federal government. A lot of infrastructure has been built in the last few years by the way - just look at the non-residential construction numbers, which are at very high levels. The "real income" numbers are highly misleading and often bear little resemblence to folks actually well being. A look at real wage numbers show that Americans are actually worse off relative to inflation than they were 45 years ago, which we know aren't true. Many TV pundits will use the "real wage" argument to attack the government in power, but won't tell you that the real wage measurement revealed that wages went down in most the 70s, in most the 80s, in the first half of the 90s and in most the last five years. It's purely a bad measurement.

[olephart]

"The budget deficits in 2005, 2006, and 2007 were small and below the average of the past 40 years. 9/11 and the economic stimulus were responsible for the deficits of 2003, 2004, and 2008. but we should have seen surplus in 2006 and 2007 to compensate for that"

Pure unadulterated fiction. The phony numbers you parrot are for fools. The budget deficit is shown by the simple increase on a yearly basis of the National Debt. This has increased by 500 billion for each of the past 7 years and is on track to increase by 800 billion this year. If you can't face reality this is not the place to come sport.

"Most infrastructure is funded by local and state governments and by private enterprise"

Tell that to Eisenhower and the Administrations following his in building the Interstate Highway System. In fact, the Federal Government funds 90% of much of the construction with States picking up 10%.

"A look at real wage numbers show that Americans are actually worse off relative to inflation than they were 45 years ago, which we know aren't true"

How the Hell would you know? In 1974 I was busting freight part time for $7.40 an hour. The temps we hire now for doing the same thing get $6.50 an hour. Adjusted for inflation that's about one sixth of what I was making 34 years ago.

[BBackSoon]

Ok, I cannot compete with governmental numbers that are pulled out of thin air or created by excluding things like food and energy. But let me bring this a little closer to home here. I started my current job 8 years ago. At that time I was making enough money to buy my first home, my first new car and still had a little money left to play.

Now my paycheck is spent before I even see it, in the last 8 years gasoline has gone up at least 100%, my electricity had gone up about 150%, propane has doubled, health insurance is up well over 300% and food costs are now creeping up week by week. My pay has gone up about 40% in those 8 years thanks to one big promotion early on. The usual increase is 2.75% a year.

Could you print out your statistics and mail them to me, because I might need to burn them to heat my house this winter.

Rising tide raises all boats, My A$$!

[dpg54]

Do you know about the L-curve http://www.lcurve.org ?

Well here is the genesis of the L-Curve: Capitalism 101

Step 1. There is only one way to get rich, employ others, and pay them less than their output is worth.

Step 2. Convince workers that providing them a job is a gift far superior to anything that they can produce.

Step 3. Popularize the belief that attaining great wealth is a noble pursuit.

Step 4. Persuade workers that they too can be rich if they work very hard.

Step 5. Mesmerize workers into borrowing money to buy as many trinkets as they dare.

Step 6. Watch the money roll in!

[strangelet]

I know this is late in the day, but who the hell is DuganS1?? Art Laffer? Hale, I think I understand your desire to win people to your view by deploying facts and logic; but over the years I've come to realize that some folks are fundamentally un-persuadable. If they have a sufficiently strong bond to a view, it cannot be assailed by reality. They will resist with fractally regressive arguments, and if all factual logic fails, they will make stuff up. You cannot win.

Now, sometimes it can be useful because it allows you to sharpen your arguments, but once you've gotten as much of that as you can, I strongly recommend silence.

BTW, as always, your analysis is very sharp.

[therealredstateblues]

Dugan can cherry pick, cite one sided and/or erroneus "data" and completely make stuff up all he wants

It does not change the reality that whole segments of workers and regions of the country are not benefitting from supply side economics and its cousin globalization

People see it in their paychecks, in their utility bills, when they go to the doctor, the grocery store, the gas station, senduing their kids to college and so forth. People know there is somethng terribly wrong with the economics of our country, People see that our govt has become the tools of multinatiuonal interests, rather than representing the will of the people as is their constitutional responsibility

reality trumps bull any day and every day of the week, The problem with the dugans of the world is that they are so blinded by their ideology they can not see it, or they benefit from the declines of others and don't give a d@mn

[DuganS1]

Don't forget that George W Bush only lowered taxes on the top bracked from 39.6% to 35%, not a big move on a percentage basis. We also can't forget that a full 50% of American adults pay no federal income tax what-so-ever, and a lot of those folks can thank George W. A lot of folks, in fact, get much more back in their tax refunds then they ever payed in because of earned income tax credits, etc.

[aFlyoverPerson]

Bondad, do you have access to data on how many people have reduced or eliminated contributions to their retirement accounts since the Bush administration took office? It is the fastest way to increase liquidity in a family's budget so I imagine that it would be a good indicator of the difficulty that even well-employed people are having with making ends meet.

[darthdarcy]

The entire so called Republican fiscal conservatism and free trade doctrine is an abysmal failure of epic proportions..!

An McCain wants to inflict even more of this on America..!

[DuganS1]

Free trade has been the doctrine of the United States since right after WW2. Free trade before WW2 was a doctrine championed by liberals because it enabled the poor and lower middle-class to afford consumer goods, whereas the Republicans used to (pre-WW2) used to support protectionism which enabled domestic manufacturers to keep prices high at the expense of US consumers.

[darthdarcy]

Yada yada, Free trade as the Conservatives practiced it and our disloyal greed ridden corporations is simply another word for "economic abandonment..!"

Trade is important but Fair Trade that serves America's best interests not trade that strips America to the bone and then sucks the marrow out of what was a great powerful self reliant prosperous nation...!

[therealredstateblues]

McCane told a group of autoworkers in Michigan that the reason supply side and globalization wasn't working was because we aren't doing enough of it - talk about out of touch!!

[FightingTheRight]

I haven't gotten a raise in 3 years, but my job duties keep increasing.

Oh wait, I do get a year end bonus that averages out to .09 cents an hour. This company keeps growing and this privately held company's profits keep increasing though.

Now that really helps me with the increase in gas prices, home heating, health insurance(which I buy myself), food and property taxes.

Keep telling the "statistcal truth" Bond Dad.

The middle class know the rest of the story.



The "Middle Class" lives in the real world, not the world of charts, grafts and annual reports.

From their economic standpoint, higher oil prices increasing the cost of gas, home heating, food and many other day to day expenses tell them the real story of the economy.

Add to that, multiple houses for sale on every street and road they travel on, the increasing cost or lack of affordible health insurance, along with stagnant wages and they see a bleak picture of the current economy.

No amount spin can change this.

[therealredstateblues]

Sadly this is a story playng out in nearly every community. There is no denying the middle class squeeze. Uncertainty about jobs, costs of basic necessities, medical care, housing is preventing people from making any big ticket purchases. Job losses are affecting everyone - friends, neighbors, family members.

Homes in my highly desireable solidly middle class neighborhood never sat on the market longer than a month now sit for 9 months or more ( the local Realtors Assoc says there is an 11 month supply currently - highest on record for our town) with reduced price signs on them. Some end up getting auctioned by the seller at a loss. And these are not foreclosures or subprimes we are talking about - this is people whose jobs have been lost and forced to either downsize or move to find work elsewhere.

The problem is this was once an industrial powerhouse and home to many innovative products we take for granted today - manufacturing was king employing over 40% of the workforce and creating a very thriving town and comfortable middle class. Most of the manufacturing has left, and the few left are mere shadows of their former selves. The only new jobs have been retail and resturant and even those are starting to leave as well as the customer base shrinks. This again is a story playing out all over the midwest

[DuganS1]

Many of the "anxieties" you list - for example, cost of basic necessities, uncertainty about jobs, housing - are a 2008 phenomena that is related to the business cycle, not any government policy. Again, manufacturing doesn't employe nearly as many folks as it used to mostly because of productivity gains, not outsourcing. Manufacturing has historically see the highest productivity gains of any sector. Unless you're against automation, robots, computers, and other streamlined processes, you shouldn't be concerned that 40% of Americans don't work in factories anymore.

[therealredstateblues]

Part deux:

Supply side economics and its cousin globalization are working as planned - it is breaking the US middle class, and with it taking away a fundamental underpinning of democratic systems and institutions. The social contract that if you work hard , get a good education and play by the rules you are guranteeed a spot in the middle class has been broken - we need a new New Deal.

[DuganS1]

The problem with that analysis was that most those manufacturing jobs (which for some reason you equate with the "middle class") are unskilled or semi-skilled labor that require little to no education. Large numbers of such workers have simply been replaced by automation and robotics. Many of them were working for companies that simply went out of business because labor costs were too high (because of their union contracts) to make them competitive. But if you close off foreign competition you severely limit economic growth and bring on massive inflation within the United States.

[Rog49Thomas]

The efficacy of the so-called "Bush boom" depends precisely on one's definition of the national interest.

If one belongs to a party where the national interest is believed to be synonymous with the interests of the haves and the have mores, President Pan has done a reasonably tolerable job at least in the short term. The rich are much richer.

While profound damage has been done to our economy and thus our national security, I rather doubt that David L or Eric P will be without health care or have their homes foreclosed.

The rich are quite resourceful and resilient folk. They always seem to do well no matter what the state of our economy.

A lesson that perhaps more of us could learn to emulate.

[Synoia]

2 Points:

1. "The Bush Boom Was A Complete Bust" For Workers.
2. My Medical insurabce was $230/month in 1999. It's now $800.

[francoise]

We Westerners call it a recession.

In China and India, they don't.

Isn't it more simply a shift of wealth from us to them ?

We've been bragging about what the "good life" consists in for too long. Now the Chinese know how happy one is thanks to driving huge SUVs, thanks to freezing at home in summer and boiling hot in winter, thanks to being dressed in Dior and being perfumed in Guerlain.

We're depressed ? Yeah, look at how skinny we are, look at our empty roads, look at our empty malls.

Oh yeah right, the Chinese compel us to buy their crap at the point of a gun. And these guys aren't allowed the good life. We Westerners only have a right to be the 10 % minority who consume the 80 % ressources.

So let's focus on our navel and let's complain on the unfairness of the economy.

[DuganS1]

Real GDP has grown by $2 trillion since George W came to office (to over $11.7 trilion). The total GDP of China is $3.2 trillion. The entire GDP of the United States in 1954 in current dollars was $2 trillion. Our economy has added economic output in the last seven and a half years equal to the entire size of what the US econmy was in 1954. Our economy also grew more than the Chinese economy in this period.

[therealredstateblues]

You can put make-up on a pig - its still a pig

No matter what misinterpreted data you throw out there, whole sectors of the eocnomy, regions of the country and segments of wage scales have not and are not benefitting from your supply side free trade based economy

[lletaa]

I have worked in strip malls all my life as owner/op of restaurants. When ever I see repub business executives tell how the goldilocks economy is wonderful I can only remember bushs remark that his constituents are the haves and have mores. It is so obvious to me and my fellow micro small business people that promoting the vast middle and lower wage earners is best for my business . The small strip malls around here(east county San Diego) are empty with many shops for lease. Small business employs over 80% of the work force. The stock market is just about the same place as it was when bush took over. If we have 4 more years of trickle down forget it, might as well close up. you can use stats as much as you want but I know we are under seige, please, get rid of trickle down economics.

[DuganS1]

Statistics show that money spent at restaurant and fast food establishments have increased by 50% over the past eight years, pretty good considering the large rise in gasoline prices. That 50% is the same percentage increase seen from 1992-2000, a period of declining gas prices. Plus the recent eight year period grew from a much higher base making it more impressive.

http://www.census.gov/marts/www/download/text/adv72200.txt

[wolfgangmo]

I used to thing Dugan was a troll, but the more I read of his posts, the more I am convinced that he is a shill.

So Dugan, does your K street office have a window with a nice view?

[Rule Of Law]

Ah, the old "Fast food as an indicator of the Nation's fiscal health."

I can't wait for the Diet Book and Oprah tour to follow.

[DuganS1]

The unemployment rate was at or below 5.0% for three straight years. How can you blame George W Bush for low employment growth when everybody was already working? The unemployment only went up to 6% in the 2001-mid-2003 recessionary period. Most people were still working when the expansion even started. Unemployment has only been lower than the rate during George W's term in 1999-2000 and before that 1969! The "lack of job growth" argument is simply not a good one.

[WIpatriot]

What an a apologist you are....

[Bonddad]

I answered this observation in a previous thread. Here is my response.

The latest expansion started in November 2001 (according to the NBER). At the end of 2001, there were 131,826,000 establishment jobs in the US. At the end of last year there were 137,623,000. That's a total gain of 5,797,000 over 6 years/72 months or 80,513/month on average. A conservative read of population growth/employment is it takes at least 100,000 month to absorb population growth. In other words, job growth didn't even keep up with population growth, let alone absorbing people who lost jobs back into the work force.

Even using your more advantageous starting point of 2003 we get the following:

But even using your starting point, you get the following. There were 137,623,000 jobs at the end of 2007 and 129,999 at the end of 2003 for a total gain of 7,624. Divide that by 48 months and you get 158,833/month. This is barely more than population growth. either way, you have weak job growth and little reason for wages to increase because there is no lack of supply for employees.

Therefore, under even the rosiest scenario that makes the Bush expansion look the best (that is, starting in 2003), the economy did not create enough jobs to absorb the combination of population growth and putting unemployment people -- people who lost their job in the recession --- back to work.

As a result, we get stagnant real median household income.

[RedneckDem]

Hale, thanks! This is why I send all of your articles to my republican friends to dispute, with statistics backed by research and FACTS all of their rediculous opinions about the economy.

Your articles are opinions based upon factual info, theirs are just opinions. And I surely dont mind the fact that you have no problems going after Dems too.

[Bonddad]

Let's review:

In a previous thread, you stated "supply side works". I demonstrated supply-side GDP growth is nothing special compared to non-supply side policies. In addition, I demonstrated that revenues (when adjusted for inflation) from supply side administrations were in fact less under non- supply side policies. You offered no refutation of this point. Instead you changed the topic.

Here you have said my statistics were misleading. I demonstrated that even using your 2003 benchmark job growth is the weakest of the last 40 years. I also demonstrated that your inflation measure (the GDP price deflator) was wrong because it does not correspond in any way with the obvious commodity inflation that exists right now. Again, you offer no refutation.

You also stated that medical care has not increased in price this year, when in fact premiums alone have increased 6.1%. Regarding apparel etc. you have not taken account of the price increases that have been caused by transportation price increases which have been announced by every transportation sector (marine, land and air).

I should add -- if you are going to use employment benchmarks as a measure of recession, then you would have to admit we are currently in a recession based on unemployment claims and year over year establishment job growth change.

Simply put -- you have been right about nothing. You have no credibility.

[DuganS1]

Even if you use the benchmark from 2003, the numbers are very misleading because unemployment was already very low (around 6%). Most cycles have seen high employment growth simply because so many jobs were lost during the previous recession. Second, supply-side does work because it's been in practice for the last 26 years and government revenue has grown significantly since that time. Tax rates have gone down tremendously from the 1980s onward but yet have generated tremendously more revenue. Do you remember the 71% top tax rate of the late 1960s and 70s? How about the 90% bracket in the 1950s. About apparel, the "transportation costs" only matter if the price of the good increases at the retail level, and it hasn't. The prices of apparel has only gone up 0.8% year on year as of July. Medicare care costs have gone up only 3.5%.

http://www.bls.gov/news.release/pdf/cpi.pdf

[Boomerwoman]

Keep drinking that kool-aide.

[Fremon]

During the "good" years where pay did not keep up with inflation, many individuals had to take on two jobs to stay even. This in the eyes of the employment figures looked like jobs created which didn't take into consideration lower paying wages. These figures also don't take into consideration those persons who exhausted their unemployment monies and went off the rolls. The above argument is good that we were living in a house built on a weak foundation. This was supposed to be "cured" by the tax breaks which would be spent and keep the economy going. As was cheap money. All a sham.

[DuganS1]

The unemployment rate includes folks who are run out of benefits but continue to look for work. The continuing claims number just has folks who are getting unemployment benefits. As long as someone actively seeks work for a period of time (I forget how long) they are considered unemployed and in the work force.